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How Virtual Reality Can Help Bankers Become More Empathetic – And More Ethical

Claire A. Hill*

La réalité virtuelle peut-elle aider les banquiers à devenir plus empathiques – et plus éthiques?

Cómo puede la realidad virtual ayudar a los banqueros a ser más empáticos –y más éticos A realidade virtual pode ajudar os banqueiros

a se tornarem mais empáticos – e mais éticos?

㰮ᢳ⦄ᅲབԩᐂࡽ䫊㸠Ϯ㗙বᕫ᳈᳝ҎᚙੇϨ᳈᳝䘧ᖋ?

Résumé

Le droit n’a pas été en mesure de mettre un terme aux scandales qui se sont succédé dans le secteur fi nancier et y ont engendré d’immenses pertes, touchant plusieurs publics et ternissant durable- ment l’image des établissements bancaires.

La culture professionnelle des ban- ques – et des banquiers – est en large part responsable de cette triste situation. À aucun moment de la carrière des cadres du secteur – qu’il s’agisse de recrutement ou de licenciement, de formation ou de promotion – n’est prise en compte l’idée

Abstract

The scandals in the fi nancial industry have thus far been beyond the law’s power to prevent. Many constituencies have suf- fered signifi cant harm, including those dealing with fi nancial institutions, and many others. Indeed, the institutions them selves have also been adversely affected.

Bank culture is apparently in signifi - cant part to blame. Banks hire, and pro- mote and otherwise incentivize, train, and discipline and fi re, employees in ways that encourage them to be heedless of the

131

* Professor and James L. Krusemark Chair in Law, University of Minnesota Law School. I wish to acknowledge very helpful conversations with June Carbone and Francis Shen, and heroic research assistance of Scott Dewey.

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consequences of their actions – to third parties and sometimes, even to the banks themselves. The craft of gaming fi nancial rules, formulas, and covenants is lauded, as are other activities that violate the spi- rit of the law while honoring its letter.

The corporate form allows bankers and banks to get the benefi ts of risk-taking while limiting their exposure to the asso- ciated costs. The result is predictable, and becomes embedded in the banks’ ethos.

Bankers readily experience the proxi- mate results of what they do – the bonuses and promotions, the admiration of their peers and the camaraderie of their work- groups engaged in a collective task, and their own internal pride – but may not be willing or even able to make the imagi- native leap to the less proximate effects.

Lack of cognitive and affective empathy (the former meaning not knowing about others’ reactions, and the latter meaning not caring) may be a big reason why.

This piece asks the reader to engage in a thought experiment: What if bankers could be made more aware of the con se- quences of their actions by the use of vir- tual reality?

Resumo

O direito não foi capaz de prevenir os escândalos que se sucedem no setor fi nan ceiro e causam enormes perdas, afe- tando variados públicos e com pro me tendo seriamente a imagem dos estabelecimentos bancários.

que les actes ont des conséquences con- crètes sur les personnes, et aussi sur les institutions.

Les banquiers évoluent au cœur d’un environnement qui loue l’ingéniosité de ceux capables d’inventer formules et pro- duits sophistiqués, se jouant dans les faits de l’esprit de la loi tout en en respectant formellement la lettre. Agissant au sein d’entités juridiques qui ne les engagent pas personnellement, les banquiers peu- vent prendre quasiment tous les risques sans avoir à en subir les conséquences s’ils échouent.

Dans leur monde clos, où les com- munautés de travail se jaugent et se com- parent, les fi nanciers les plus capables accumulent admiration des pairs et or- gueil professionnel, qui se traduisent con- crètement par de confortables primes et de belles promotions. Pour autant, sont- ils désireux, ou simplement en mesure, de faire l’effort consistant à s’interroger sur l’impact de leurs actions ? Le plus sou vent non, par manque absolu d’empathie co- gnitive (quelles sont les réactions de ceux touchés par mes actes ?) comme d’empa- thie affective (pourquoi me soucierais-je de leurs réactions ?)

Cet article propose au lecteur de s’en- gager dans un exercice mental: le recours à la réalité virtuelle ne pourrait-il pas aider les banquiers à devenir plus cons- cients des conséquences de leurs actes ?

Resumen

El derecho no ha podido poner fi n a los escándalos que se han desencadenado en el sector fi nanciero generandole gran- des pérdidas, afectando diversos públicos y empañando la imagen de los estableci- mientos bancarios.

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Virtual reality and banker’s ethics 133

A cultura bancária parece carregar boa parte da culpa. Muitos bancos con- tratam, promovem e incentivam, treinam, disciplinam e demitem empregados de maneiras que os encorajam a serem desa- tentos às consequências de suas ações – para terceiros e, às vezes, até para os pró prios bancos. A arte de jogar com as regras fi nanceiras, fórmulas e contratos é elogiada, assim como são outras ativi- dades que violam o espírito das leis mas honram sua letra. A forma coorporativa permite aos banqueiros e bancos receber o benefício de assumir riscos ao mesmo tempo que limitam sua exposição aos cus- tos associados. O resultado é previsível e se internaliza no ethos dos bancos.

Os banqueiros experimentam facil- mente os resultados imediatos do que f azem – os bônus e as promoções, a ad- miração de seus pares e a camaradagem de seus grupos de trabalho engajados numa tarefa coletiva, e seu próprio or- gulho profi ssional – mas talvez não este- jam dispostos ou sejam mesmo capazes de fazer o salto imaginativo para os efei- tos mais distantes. Pode ser uma grande razão do porquê a falta de empatia cogni- tiva e afetiva, signifi cando a primeira não saber a reação dos outros, e a segunda não se importar.

Este artigo pede ao leitor para se en- gajar numa experiência de pensamento: e se pudéssemos fazer os banqueiros mais conscientes de suas ações usando a reali- dade virtual?

La cultura profesional de los bancos – y de los banqueros– es en gran parte responsable de esta triste situación. En ningún momento de la carrera profesio- nal de los ejecutivos de este sector de la industria –se trate de contratación o des- pido, de capacitación o promoción– se tiene en cuenta que los actos tienen con- secuencias concretas en los individuos, y también en las instituciones.

Estos actúan dentro de un entorno que elogia el ingenio de aquellos capaces de inventar fórmulas y productos sofi sti- cados, que juegan con el espíritu de la ley aunque respetando formalmente la letra.

Actuando en el seno de entidades jurídi- cas que no los involucra personalmente, los banqueros pueden tomar práctica- mente cualquier riesgo sin sufrir las con- secuencias si fracasan.

En ese mundo cerrado, donde las comunidades de trabajo se evalúan y se comparan, los fi nancieros más capaces acumulan admiración de sus colegas y orgullo profesional, lo que se traduce concretamente en interesantes bonifi ca- ciones y grandes promociones. Sin em- bargo, los banqueros parecen no estar dispuestos o incluso no ser capaces de imaginarse el impacto de sus acciones. La falta absoluta de empatía cognitiva como emocional (primero por no conocer cuáles son las reacciones de las personas afectadas, y segundo por no importarles o preocuparles) puede ser una razón im- portante de ello.

Este artículo sugiere al lector em- prender un ejercicio mental: ¿el recurso a la realidad virtual podría ayudar a los banqueros a volverse más conscientes de las consecuencias de sus actos?

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䞥㵡Ϯⱘϥ䯏Ꮖ㒣䍙ߎњ⊩ᕟⱘ乘䰆㛑࡯DŽ݀ӫ಴ℸ䙁ফњ䞡໻ᤳᆇˈࣙ

ᣀϢᴎᵘѸᯧⱘҎDŽџᅲϞˈᴎᵘᴀ䑿гᰃফᆇ㗙DŽ

䖭೼ᕜ໻⿟ᑺϞ㽕ᔦ੢Ѣ䫊㸠᭛࣪DŽ䫊㸠᢯ࢳǃᦤᢨǃ▔ࢅǃ෍䆁ǃᚽ ៦ǃᓔ䰸ਬᎹⱘᮍᓣᅲ䰙ᰃ೼哧ࢅҪӀᗑ㾚㞾Ꮕ㸠Ўᇍ㄀ϝҎüü᳝ᯊ⫮㟇ᰃ ᇍ䫊㸠üüⱘৢᵰDŽϡᡞ䞥㵡㾘߭ǃ݀⼎੠༥㑺ᬒ೼ⴐЁⱘخ⊩ফࠄ㻦ᡀˈা

䙉ᅜᄫ䴶Ϟⱘ⊩ᕟˈै䖱㚠⊩ᕟⱘ㊒⼲DŽ݀ৌࠊ೼᥻ࠊ䫊㸠Ϯ㗙੠䫊㸠ݦ䰽៤ ᴀⱘৠᯊˈ䅽ҪӀҢݦ䰽Ёᕫ߽DŽ㒧ᵰϡߎ᠔᭭ˈᑊᔶ៤њ䫊㸠Ϯⱘ亢⇨DŽ

䫊㸠Ϯ㗙Фᛣԧ偠㸠ЎⱘⳈ᥹ৢᵰ˖༪䞥ǃᰟछǃৠ㸠ⱘ䩺ᜩǃখϢ䲚ԧ ӏࡵⱘᎹ԰ᇣ㒘ಶ䯳ᚙ䇞ǃҹঞ㞾Ꮕݙᖗⱘ偘چᛳDŽԚҪӀϡᜓ⫮㟇ϡ㛑এᛇ 䈵ϡ䙷МⳈ᥹ⱘৢᵰDŽ㔎Уৠ⧚ᖗⱘ䅸ⶹ੠ᚙᛳ˄㔎У䅸ⶹᰃᣛϡњ㾷ҪҎⱘ ডᑨˈ㔎Уᚙᛳᰃᣛϡ݇ᖗҪҎⱘডᑨ˅ৃ㛑ᰃϔϾ䞡㽕ⱘॳ಴DŽ

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ࡴ݇ᖗҪӀⱘ㸠Ўৢᵰˈ߭Ӯᗢḋ˛

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CONFIDENTIAL Letterhead of Laissard Pères

Professor X

Law School and Business School

Department of Social Neuroscience (courtesy appointment) Springfi eld University

Dear Professor X:

We write to you in hopes that you will be willing to assist us with a new initiative.

As you know, owing to quite a few well-publicized scandals, the banking industry in general,

1

and our fi rm in particular, has come under increasing pressure and scrutiny from regulators and the public.

2

We have had to pay large amounts in legal fi nes, penalties and settlements, and have signifi cant (and largely unwelcome) regulatory involvement in our busi- ness.

3

Moreover, many people, including policymakers and members of the media and the public, seem to believe that our fi rm and indeed, the industry generally, single-mindedly pursues profi ts, taking risks heedless of the consequences to both our customers and to the broader society.

4

1 “The fi nancial services industry has the lowest reputation of any industry” 24/7 Wall St., “Companies with the Best (and Worst) Reputations”, MarketWatch.com (May 12, 2016), online: <https://www.marketwatch.com/story/companies-with-the-best-and- worst-reputations-2016-05-12>. “[O]nly 30% of the general public trusts fi nancial services companies”, Reputation Institute, Calculating a Return on Reputation Intelligence, online: <https://www.reputationinstitute.com/why-reputation-institute/fi nancial-services- expertise>.

2 The framing of the problem, and the proposed solution, builds on Claire A. Hill &

Richard W. Painter, Better Bankers, Better Banks: Promoting Good Business through Contractual Commitment (Chicago: The University of Chicago Press, 2015).

3 On the aggregate amount of fi nes, see Boston Consulting Group, “Digitization Emer- ging as the Key to Survival in Banking”, March 26, 2019, online: <https://www.bcg.

com/d/press/26march2019-digitization-emerging-as-the-Key-to-survival-in-banking- 217072> (as of March 26, 2019 $ 372 billion).

4 See generally Hill & Painter, supra note 2.

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Wishing to be proactive about combating this state of affairs, we engaged Consultant Y, who prepared a report.

5

As discussed below, we wish to hire you to help us follow through on some of the recommendations in the report, specifi cally, to design and put in place a program that would enhance our bankers’ awareness of the consequences of their actions.

Consultant Y’s charge was to tell us how we could minimize the possi- bility of future scandals and illegal behavior, and, frankly, improve our image. Among the report’s recommendations was that we look closely at our hiring, promotion, retention, and termination policies.

6

The report noted that our policies, focusing as they do on technical, leadership, and marketing skills relevant to bottom-line results, might have selected people whose focus on tangible indicia of performance, such as “alignable attri- butes”

7

by which their results can be measured and compared with others’

results,

8

crowds out suffi cient consideration of possible effects on third parties and more broadly, effects beyond those expressly sought.

9

In pre- paring its report and coming to its conclusions, Consultant Y studied the empathy quotient of our employees

10

by setting up an anonymized testing

5 We note that some other fi nancial institutions have done so. See, e.g., Anthony Salz &

Russell Collins, The Salz Review: An Independent Review of Barclays’ Business Practices, April 2013, online: <https://online.wsj.com/public/resources/documents/SalzReview 04032013.pdf>.

6 See generally id. and Hill & Painter, supra note 2.

7 This concept is discussed in several articles by Arthur Markman and co-authors, inclu- ding in Arthur B. Markman & Dedre Gentner, “Commonalities and Differences in Similarity Comparisons” (1996) 24 Memory & Cognition 235, online: <http://groups.

psych.northwestern.edu/gentner/papers/MarkmanGentner96.pdf>; Arthur B. Markman

& Douglas L. Medin, “Similarity and Alignment in Choice” (1995) 63 Organizational Behav. & Hum. Decision Processes 117, online: <http://dx.doi.org/10.1006/obhd.1995.

1067>; Dedre Gentner & Arthur B. Markman, “Structural Alignment in Comparison:

No Difference Without Similarity” (1994) 5 Psych. Sci. 152, online: <https://doi.org/

10.1111/j.1467-9280.1994.tb00652.x>; Dedre Gentner & Arthur B. Markman, “Struc- tural Alignment in Analogy and Similarity” (1997) 52 Am. Psychologist 45.

8 The report discussed at some length the intricacies of goal setting, and how destructive individualism and competitiveness can be fostered by an excessive use of performance goals. Among the research cited in the report is Lisa D. Ordóñez et al., “Goals Gone Wild: The Systematic Side Effects of Overprescribing Goal Setting” (2009) 23 Acad.

Mgmt. Persp. 6, online: <https://journals.aom.org/doi/10.5465/amp.2009.37007999>.

9 See Hill & Painter, supra note 2, 114-117.

10 See Autism Research Centre, “Downloadable Tests, Empathy Quotient (EQ) for Adults, Empathy Quotient (EQ 60)”, online: <https://www.autismresearchcentre.com/arc_

tests>; <https://psychology-tools.com/test/empathy-quotient>. The tests are based on

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Virtual reality and banker’s ethics 137

program and providing signifi cant incentives for employees to take the test. (The incentives were suffi ciently effective that employee participation was quite high.) Employees were required to provide information about which department they worked in, and Consultant Y’s fi ndings included that in particular departments, the average and median empathy quotients were quite low. Consultant Y also studied risk-taking propensities, using a similar methodology, with a test it had developed; the report’s fi ndings were similar, with, again, results from some departments suggesting that those departments might contain a signifi cant number of people particularly attracted to risk-taking.

11

The report discussed some preliminary research suggesting a link between low empathy and high risk-taking.

12

What makes risk-taking particularly relevant in this context is that neither employees nor their companies bear the full downside of their actions. Thus, an employee taking an enormous risk on behalf of his company may infl ict signifi cant costs on others, as occurred as a result of banks’ activities lea- ding up to the 2008 fi nancial crisis. A lack of empathy, manifested in a caveat emptor worldview that people are responsible for looking after themselves,

the work of neuroscientist Simon Baron-Cohen, and were developed by Prof. Baron- Cohen. See generally Simon Baron-Cohen, The Science of Evil: On Empathy and the Origins of Cruelty (New York: Basic Books, 2011). Empathy is both cognitive and affective.

In a January 23, 2018 tweet (available here: <https://twitter.com/sbaroncohen/status/

956061933907664896?lang=en>), Professor Baron-Cohen defi ned cognitive empathy as “imagining other’s state of mind” and affective empathy as “feeling an appropriate emotion triggered by another’s state of mind/if they hear someone is upset, it upsets them.” Patrizia Thoma & Christian Bellebaum, “Your Error’s Got Me Feeling – How Empathy Relates to the Electrophysiological Correlates of Performance Monitoring”

(2012) 6 Frontiers Hum. Neurosci. 1, online: <https://doi.org/10.3389/fnhum.2012.

00135> at 1-2 defi nes empathy as follows: “Empathy broadly refers to the capacity to respond to the emotional experiences of someone else. It is thought of as a multi- dimen sional construct involving at least a cognitive component enabling an individual to understand another person’s emotional perspective and an affective component based on the ability to affectively share and respond to the emotional experiences of others.”

See also Fetzer Institute, “Interpersonal Reactivity Index (IRI)”, online: <https://backend.

fetzer.org/sites/default/fi les/images/stories/pdf/selfmeasures/EMPATHY-Interpersonal ReactivityIndex.pdf>.

11 See generally Hill & Painter, supra note 2, 108-124. Consultant Y’s report acknowledged that there would be selection bias given that the tests were only administered to people who chose to take them. However, the report used standard techniques in an attempt to correct for that bias, and concluded, especially given that many employees, in many different departments of Laissard, took the test, that the results were at least suggestive.

12 See Thoma & Bellebaum, supra note 10, and sources cited therein.

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as well as a motivation to prevail over others, combined with high risk- taking, is, the report noted, a recipe for a potentially disastrous outcome.

Consultant Y’s report also noted that our corporate culture may have encouraged this selective and very strong focus among our employees.

Stressing that our culture was not unique among fi nancial institutions,

13

the report noted that intense work hours and pressures in situations where colleagues and computers were close and others – customers, and even family – were more distant may have created a hothouse atmosphere where concerns other than achieving the stated goal were crowded out.

14

The report also noted that the credo of meritocracy may itself have allowed and encouraged a caveat emptor worldview, in which bankers might believe that anyone hurt by their activities should have done a better job looking out for himself.

15

As cultures became more dominated by a risk-taking ethos, risk-taking would increase, including through contagion effects.

16

Finally, and perhaps most ominously, the report described situations in which taking advantage of third parties and even customers became a source of community among bankers, as did illegal activities such as rate-fi xing.

17

13 See generally Hill & Painter, supra note 2, 108-124, and Salz & Collins, supra note 5.

14 Hill & Painter, supra note 2, 114-117. Recent work suggests that the sleep deprivation common among junior bankers given their workload may itself contribute to unethical behavior. One mechanism is “depletion” – energy is used up just trying to function, leaving less left to resist “the negative infl uence of others.” See David T. Welsh et al.,

“Building a Self-Regulatory Model of Sleep Deprivation and Deception: The Role of Caffeine and Social Infl uence” (2014) 99 J. Applied Psych. 1268, online: <http://dx.doi.

org/10.1037/a0036202>; David T. Welsh et al., “Overcoming the Effects of Sleep Depri- vation on Unethical Behavior: An Extension of Integrated Self-Control Theory” (2018) 76 J. Experimental Soc. Psych. 142, online: <https://doi.org/10.1016/j.jesp.2018.01.007>.

15 Hill & Painter, supra note 2, 108-124.

16 The Salz Review discusses the extent to which the trader ethos, itself very risk oriented, came to have the force it did at Barclays: Salz & Collins, supra note 5. See also the fol- lowing, on the contagion of risk-taking: “Is Risk-Taking Behavior Contagious?” Neurosci.

News (Apr. 7, 2016), online: <https://neurosciencenews.com/behavioral-neuroscience- risk-taking-3993/>. See also Hill & Painter, supra note 2, 108-124, discussing the broader change in ethos from safer to riskier banks and bankers.

17 One example given in Hill & Painter, supra note 2, 113 is the well-known “Grandma Millie” example in which Enron traders rejoiced at the high energy prices their illegal market manipulation had caused for a hypothetical “Grandma Millie.” The expletive- laden exchange was captured on tape: “Enron Traders Talking about Grandma Millie”, Youtube.com (March 17, 2009), online: <https://www.youtube.com/watch?v=DOLNW F5QMxY>. On rate fi xing, see generally David Enrich, The Spider Network: The Wild

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Virtual reality and banker’s ethics 139

The report discussed as well broader shifts in business and in society generally that contributed to the problems fi nancial institutions have had, including a highly individualistic and competitive ethos in which doing better than others is an end to be lauded and pursued whatever the means requires.

The report gave a few detailed examples of the kinds of behavior at issue, some involving our bank and some involving others. The examples included fi nancial innovations designed to do end-runs around regula- tions or covenants. These were in grey areas from a legal perspective, going

‘up to’ the line and, sometimes, over it. Some were strategies that honored the letter of the law while violating its spirit, such as targeting customers who were nominally sophisticated but known to be too credulous.

18

Some, as described in the book The Spider Network, involved networks of people who did illegal “favors” for each other.

19

The problems we face have both legal and operational components.

The two are distinct but related: what hurts us legally hurts us reputatio- nally, and what hurts us reputationally may come to hurt us legally.

20

Our compliance efforts are informed by the American Law Institute’s forth- coming Principles of the Law, Compliance, Risk Management, and Enforce- ment.

21

Consistent with what seems to be the prevailing practice, compliance and risk management efforts encompass a penumbra beyond what law requires. A blog post by one of the associate reporters on the project, sum- marizing her article on a related topic, argued that “there is…an economy of scope in selecting for empathy and moderation in risk-taking in hiring and promotion, and encouraging a corporate culture promoting those traits; admittedly, there may be some cost to profi ts in doing so, but there

Story of a Math Genius, a Gang of Backstabbing Bankers, and One of the Greatest Scams in Financial History (New York: Custom House, 2017).

18 Hill & Painter, supra note 2, 108-124.

19 Enrich, supra note 17.

20 Claire A. Hill, “Caremark as Soft Law” (2018) 90 Temp. L. Rev. 681. See also Claire A.

Hill, “Marshalling Reputation to Minimize Problematic Corporate Conduct” (2019) 99 B.U. L. Rev. 1193, summarizing recent literature on companies’ views of the impor- tance of their reputations.

21 American Law Institute, “Principles of the Law, Compliance, Risk Management, and Enforcement” (forthcoming), online: <https://www.ali.org/projects/show/compliance- enforcement-and-risk-management-corporations-nonprofi ts-and-other-organizations/>.

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are associated benefi ts as well, not just in avoiding law-breaking but also for reasons of reputation and regulatory favor.”

22

Having carefully reviewed Consultant Y’s report, we believe that our bank can do more to ensure that it appropriately and suffi ciently, con- sistent with our profi t-making mission, takes into account possible adverse consequences of what it does. We also believe that doing so would be desi- rable, helping us reduce future penalties, fi nes and settlements; we believe as well that regulators and the broader public will look very favorably on our efforts.

We are writing to ask if you would be willing to study, propose, and test a program for use at our bank that could enhance bankers’ ability to envision and take into consideration the broader effects of their actions, helping to broaden their focus beyond the immediate task at hand. Con- sultant Y’s report made considerable use of your research. Moreover, you come highly recommended, and your combination of academic appoint- ments, including a courtesy appointment in a neuroscience department, as well as your recent much-viewed TEDx talk on banker identity, make you ideal for the task.

Please let us know at your earliest convenience whether you are inclined to accept our proposal and if so, on what terms, and what you envision as to the trajectory of your work. Our interest in this project is keen, and we are willing to devote signifi cant resources to it.

We look forward to your response, very much hoping it is an expres- sion of interest.

/s/ Chief Compliance Offi cer, Laissard Pères

22 Claire Hill, “Caremark as Soft Law”, OBLB (Oxford Business Law Blog) (Oct. 5, 2018), online: <https://www.law.ox.ac.uk/business-law-blog/blog/2018/10/caremark-soft- law> summarizing Hill, Caremark as Soft Law, supra note 20.

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CONFIDENTIAL Letterhead of Professor X Law School and Business School

Springfi eld University

Laissard Pères New York, New York

To the Chief Compliance Offi cer:

I am delighted to accept your bank’s proposal. I commend the initia- tive, and very much look forward to being part of it. Adding to my delight, while I have done considerable research in “the real world,” I have not thus far had an opportunity to do anything nearly as ambitious or forward- looking as this. My terms are simple: you buy out my university teaching and administrative duties for two years, provide funding for testing and research, and contribute 10% of the amount you in good faith conclude your lessened costs and enhanced reputation are worth (an assessment I will not second-guess) to a charity I designate that focuses on enhancing professional responsibility among businesspeople.

After reading your letter, I gave some serious thought to how I would proceed, and have preliminarily concluded that what might be particu- larly promising is perspective-taking done using virtual reality technology.

The benefi ts would include showcasing your technological sophistication in tandem with your concern for the broader society.

I will begin by restating the challenge as I understand it. Bankers are not suffi ciently mindful of the broader consequences of what they do and, unfortunately, they can do signifi cant harm. Many examples can be given.

Some notable such examples include techniques to help companies and

governments report lower debt levels than they actually have. These make

them look less indebted so they can borrow on better terms, appear to

abide by debt covenants, and meet tests requiring them to have certain debt

levels. Other examples include directing sales pitches for complex risky

securities, including some believed by the bank to be “dogs,” and some

carrying very high above-market fees, to nominally sophisticated inves-

tors, including institutions and governments, whose decision-makers are

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known to actually be unsophisticated; giving bribes to get business; rig- ging rates, and more.

23

The explanation that ‘bad apples’ were responsible for the behaviors at issue is not tenable. Rather, many “good” people got caught up in doing things that did real damage. They were heedless of the potential conse- quences of their actions. They could be heedless because of a relatively recent development, that banks are now organized as corporations. Cor- porations’ owners enjoy limited liability; they can take profi ts, but needn’t fund losses. Their managers needn’t fund losses either. But until the 1970s, banks were partnerships, managed by their owners — who bore full fi nan- cial responsibility for losses.

24

I agree with Consultant Y that Laissard Pères’ hiring, promotion, punish ment and fi ring policies should be carefully reviewed and, if appro- priate, changed. But I also think that much can be done with “training” – or whatever word one might use to describe the technique that I am con sidering. The training would be directed at individuals, but have the potential to change the institution’s culture. I expect Consultant Y would agree that people vary in how much they are mindful of consequences, and that it’s critical to have a balance. In every bank (and indeed, in any large or even mid-sized organization), there are probably at least a few employees who are very mindful, some perhaps even paralyzingly so, and others more apt to act fi rst and consider later, but also, many in the middle, who will be infl uenced towards one side or the other

25

depending on the institution’s culture, as well as the infl uence of their peers. The aim is for institutions to stay comfortably away from the extreme of acting heedless of the consequences, and to not allow silos where such an ethos could nevertheless fl ourish.

23 See generally Hill & Painter, supra note 2, 19-70.

24 Id., 78-80.

25 As Hill & Painter, id., 108-124, and Claire A. Hill, “A Personality Theory of White Col- lar Criminals, Near-Criminals, and Others Involved in Bad Corporate Action (And What Law Should Do About It)” (2017) 11 L. & Fin. Mkts. Rev. 75, online: <http://dx.doi.

org/10.1080/17521440.2017.1353209>, and sources cited therein explain, this is one of many continua that, for this purpose, are roughly getting at the same thing: at one end, caution/other regardingness/empathy, and at the other, risk-taking/competitiveness/

individualism.

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Virtual reality and banker’s ethics 143

With this as backdrop, I now turn to my thoughts on how to proceed.

As I mentioned above, what I think is called for is perspective-taking done using virtual reality technology. Perspective-taking of course has a collo- quial meaning;

26

my use of the term is to techniques referred to as “pers- pective-taking” in academic literature and used in experiments in fi elds such as psychology.

Perspective-taking is not new; it has been used for quite some time.

27

Perspective-taking has a reasonable track record,

28

but it is far from a pana- cea.

29

It sometimes has good effects (such as improving people’s ability to

26 Indeed, the famous Dale Carnegie book How to Win Friends and Infl uence People (New York: Simon & Schuster, 1936) talked about the concept. An article, critical of perspec- tive-taking, quotes Carnegie as follows: “Try honestly to see things from the other person’s point of view.” Carnegie suggested this was the most important principle in the entire book: “If out of reading this book you get just one thing – an increased tendency to think always in terms of other people’s point of view, and see things from their angle … it may easily prove to be one of the building blocks of your career.” Tal Eyal, Mary Steffel, & Nichols Epley, “Research: Perspective-Taking Doesn’t Help You Understand What Others Want”, Harv. Bus. Rev. (Oct. 9, 2018), online: <https://hbr.

org/2018/10/research-perspective-taking-doesnt-help-you-understand-what-others- want>. The HBR article summarizes research described in the authors’ paper “Pers- pective Mistaking: Accurately Understanding The Mind of Another Requires Getting Perspective Not Taking Perspective” (2018) 114 J. Pers. & Soc. Psych. 547

27 “Perspective-taking”, Wikipedia, online: <https://en.wikipedia.org/wiki/Perspective- taking>. As I discuss in the text at note 40, the term sometimes is used to refer to cognitive empathy, insofar as what that term means is ‘taking the other’s perspective.’

Here, I use the term in one common usage, that of techniques to make people see others’ perspectives in various experimental and real-world contexts. See, e.g., Inga J.

Hoever et al., “Fostering Team Creativity: Perspective Taking as Key to Unlocking Diversity’s Potential” (2012) 97 J. Applied Psych. 982, online: <https://pdfs.semantic scholar.org/3f6e/94afa316e3b261fa002f072a2ecae3445829.pdf>.

28 See Hoever et al., supra note 27; Gillian Ku, Cynthia S. Wang, & Adam D. Galinsky,

“Perception through a Perspective-Taking Lens: Differential Effects on Judgment and Behavior” (2010) 46 J. Experimental Soc. Psych. 792, online: <http://spears.okstate.edu/

scwang/fi les/2010_PT_JESP.pdf>.

29 See, e.g., Hunter Gehlbach et al., “Many Ways to Walk a Mile in Another’s Moccasins:

Type of Social Perspective Taking and its Effect on Negotiation Outcomes” (2015) 52 Computers in Hum. Behav. 523, online: <https://doi.org/10.1016/j.chb.2014.12.035>;

Claus Lamm et al., “Perspective Taking Is Associated with Specifi c Facial Responses During Empathy for Pain” (2008) 1227 Brain Res. 153, online: <https://doi.org/10.1016/

j.brainres.2008.06.066>; Eyal, Steffel, & Epley, supra note 26. See also Debra Gilin et al.,

“When to Use Your Head and When to Use Your Heart: The Differential Value of

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work in diverse teams,

30

or reducing stereotypes

31

); it also sometimes has negative effects, such as enhancing aggressiveness and competitiveness.

32

It also may not be particularly effective where the ostensible perspective- taker doesn’t have much of a basis for being able to imagine someone else’s perspective, and has good alternatives (such as asking!) available.

33

Perspective- Taking Versus Empathy in Competitive Interactions” (2013) 39 Persona- lity & Soc. Psych. Bull. 3, online: <https://doi.org/10.1177/0146167212465320>; Cynthia S. Wang, “The Cultural Boundaries of Perspective-Taking: When and Why Perspec- tive-Taking Reduces Stereotyping” (2018) 44 Personality & Soc. Psych. Bull. 928, online:

<https://doi.org/10.1177/0146167218757453>.

30 See Hoever et al., supra note 27.

31 Eyal, Steffel, & Epley, supra note 26. See also neuroscientist Lasana T. Harris’s research regarding the formation of negative stereotypes concerning the homeless and other marginalized communities, e.g., Lasana T. Harris & Susan T. Fiske, “Social Groups that Elicit Disgust Are Differentially Processed in mPFC” (2007) 2 Soc. Cognitive & Affec- tive Neurosci. 45, online: <https://doi.org/10.1093/scan/nsl037>; Lasana T. Harris &

Susan T. Fiske, “Dehumanizing the Lowest of the Low: Neuro-Imaging Responses to Extreme Outgroups” (2006) 17 Psych. Sci. 847, online: <https://doi.org/10.1111/j.1467- 9280.2006.01793.x>; Dorothy Allen-Pickard, Noah Payne-Frank, & Jess Gormley,

“The Bystander Effect: Neuroscientist Shows How Our Brains Dehumanise Homeless People – Video”, The Guardian (Jan. 2, 2019), online: <https://www.theguardian.com/

society/video/2018/dec/30/the-bystander-effect-neuroscientist-shows-how-our- brains-dehumanise-the-homeless-video>.

32 See, e.g., Gillian Ku & Kathy Brewis, “The Power of Perspective-Taking: Being Able to Step into Somebody Else’s Shoes Is an Important Skill for Any Leader – Including the President of the US, Says Gillian Ku”, London Bus. School Rev. (Feb. 1, 2017), online:

<https://www.london.edu/faculty-and-research/lbsr/power-of-perspective-taking>;

Gillian Ku, Cynthia S. Wang, & Adam D. Galinsky, “The Promise and Perversity of Perspective-Taking in Organizations” (2015) 35 Res. in Org. Behav. 79, online: <https://

doi.org/10.1016/j.riob.2015.07.003>; Cynthia S. Wang et al., “Perspective-Taking Increases Willingness to Engage in Intergroup Contact” (2014) 9 PLoS ONE e85681, online:

<https://doi.org/10.1371/journal.pone.0085681>; Cynthia S. Wang et al., “Stupid Doc- tors and Smart Construction Workers: Perspective-Taking Reduces Stereotyping of Both Negative and Positive Targets” (2014) 5 Soc. Psych. & Personality Sci. 430, online:

<https://doi.org/10.1177/1948550613504968>; Ku, Wang, & Galinsky, supra note 28.

33 Eyal, Steffel, & Epley, supra note 26. “Social psychological research has demonstrated many benefi ts of perspective-taking – increased altruism, decreased stereotyping, and a stronger social bond with another person. But here’s the thing: Almost no research has investigated whether trying to take the perspective of another person actually increases your insight into what they truly think, feel, or want.” The authors investigate this and conclude that: “Perspective-taking may indeed work some wonders, but increasing insight into another’s mind does not seem to be among them.” The alterna- tive the article discusses is to ask people what they want – the article seems to be direc- ted towards business people seeking to fi gure out, especially, what a customer might

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Virtual reality and banker’s ethics 145

Perspective-taking as a technique has an obvious and intuitive appeal.

Many people are in the ‘get people to behave differently’ business – regula- tors, policymakers, employers, co-workers, coaches, and teachers are obvious examples. Most salespeople are too – if people did not need to be

‘sold’ on buying whatever it is the salesperson is selling, salespeople would have far less to do. Getting people to behave in particular ways requires us to know something about why they behave as they do – in effect, to see things from their perspectives. (And, as to many things, one can’t simply ask, or one can’t trust the answers one would get.)

Obvious generalizations will get us quite far. Money motivates, more money motivates more than less money, promotions motivate, fi nes and being fi red are disincentives, etc. But a model that gives pride of place to these instrumental materially-oriented rewards and punishments leaves many gaps. At some point, more money is worth very little. There are things people regard as ‘priceless’ – things they wouldn’t do or sell for any price or conversely, where the term is used metaphorically, would pay astrono- mical amounts for. And people are motivated by many other things.

34

Perspective-taking necessarily used to be done in a low-tech way: people were, for instance, given vignettes and then asked questions or given cer- tain tasks to do. This can be quite enlightening and successful. Indeed, as a law professor, I have had some success getting my students, who, typically refl exively and unconsciously, identify with employees, tenants, buyers, and shareholders, to conjure up the perspective of employers, landlords, sellers, and corporate managers. But in my view, low-tech approaches have certain limitations – limitations that high-tech approaches, notably virtual reality, might not have, or at least, might not have as much. The limita- tions relate to ability and willingness to take another perspective. What

“ability” means is obvious. To start with some fanciful examples: I cannot imagine looking forward to a horror movie or to a meal consisting of salami and pepperoni. And of course failures of the imagination are parti- cularly acute as to core attributes and attitudes. Someone who comes from a community that has never experienced material deprivation may be

want. The project we are envisioning here would be directed at something different.

The imaginative exercise would in a sense be the easy part; the summoning up of the associated emotions would be as or more important.

34 See generally Hill & Painter, supra note 2, 108-124; Lynn Stout, Cultivating Conscience:

How Good Laws Make Good People (Princeton: Princeton University Press, 2010).

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hard pressed to conjure up the perspective of someone who has expe- rienced it frequently. Someone whose peer group has been treated very badly by law enforcement may fi nd it hard to imagine viewing police as a protector.

The problem is not just a failure of the imagination (that is, a failure of ability). There is also a failure of will. The intuition is conjured up by the famous Upton Sinclair quote: “It is diffi cult to get a man to understand something, when his salary depends on his not understanding it.”

35

People helping design fi nancial techniques that enable a country or company to conceal part of its debt have an incentive to think of themselves as good people, earning a living through their intelligence and hard work, or at least not think of themselves as bad people, helping their clients fool others in ways that could cause serious damage. They may not naturally think of the consequences of their actions; indeed, Hill & Painter argue that they do not, due to what they call logistical and moral crowding out.

36

And the forces limiting their ability and will to conjure up the conse- quences from another’s perspective might be stronger than could be coun- tered via low-tech perspective taking. Stated differently, when we are asked to imagine someone else’s situation, we will generally process it through our own ‘lens.’ More formally, we are, I believe, ‘cognitive misers’ who seek to save psychic energy; often, we use ‘simulation’ (of our own responses) when asked to take another’s perspective.

37

Compounding the problem,

35 “Upton Sinclair: Quotes: Quotable Quotes”, Goodreads, online: <https://www.good reads.com/quotes/21810-it-is-diffi cult-to-get-a-man-to-understand-something>. Many terms, related to one another, in the literature, conjure up the intuition. These include confi rmation bias, status quo bias, and cognitive dissonance; all these help people to pre- serve their pre-existing world views. See generally Nicholas Epley & Thomas Gilovich,

“The Mechanics of Motivated Reasoning” (2016) 30 J. Econ. Persps. 133, online: <https://

pubs.aeaweb.org/doi/pdfplus/10.1257/jep.30.3.133> (on motivated reasoning). See also Claire A. Hill, “Cheap Sentiment” (2018) 81 Law & Contemp. Probs. 67, discussing motivated reasoning, confi rmation bias, and cognitive dissonance.

36 Hill & Painter, supra note 2, 114-117.

37 On cognitive misers, see “cognitive miser” defi nition in Andrew M. Colman, A Dictio- nary of Psychology (3d. ed. 2008), online: <http://www.oxfordreference.com/view/

10.1093/acref/9780199534067.001.0001/acref-9780199534067-e-1614>. On simulation, see Shogo Tanaka, “Simulation Theory vs Theory Theory”, Embodied Approach (blog) (Feb. 19, 2011), online: <http://embodiedknowledge.blogspot.com/2011/02/simulation- theory-vs-theory-theory.html>.

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Virtual reality and banker’s ethics 147

we think we are far better at imagining others’ perspectives than we really are.

38

Before proceeding to consider perspective-taking done via virtual rea- lity, it is worth emphasizing an important point. While the foregoing speaks in terms of perspective-taking, perspective-taking and empathy are some- times treated as synonyms.

39

More specifi cally, researchers distinguish between cognitive and affective empathy, the former being sometimes referred to as perspective-taking and the latter relating to feeling another’s emotions and sensations. Both types of empathy typically co-exist, but one can exist without the other.

Notwithstanding the supposed identifi cation of perspective-taking as cognitive empathy, the literature implicitly assumes co-existence. Perspec- tive-taking is desirable if the person taking the other’s perspective does something good on account of having done so; it is neutral if one does nothing, and it is bad if one takes advantage, the latter being a characteris- tic of psychopaths, who have cognitive empathy but not affective empathy.

40

38 See generally Emily Pronin, “The Introspection Illusion”, in Mark P. Zaan, ed., Advances in Experimental Social Psychology (New York: Academic Press, 2009) 1; Emily Pronin,

“How We See Ourselves and How We See Others” (2008) 320 Sci. 1177, online: <https://

pdfs.semanticscholar.org/57f5/d4d7dd4a94cfde7d9f8aa7c567bd623889a6.pdf>. See also Heidi L. Maibom, “Limits of Perspective Taking” (2013) 97 Procedia – Soc. & Behav.

Scis. 511, online: <https://doi.org/10.1016/j.sbspro.2013.10.266>; Nicholas Epley, “Be Mindwise: Perspective Taking vs. Perspective Getting”, Behav. Scientist (Apr. 16, 2014), online: <http://behavioralscientist.org/be-mindwise-perspective-taking-vs-perspec- tive-getting/>; Claire A. Hill, “Reducing the Social Costs of (Some) Priors”, Minnesota Legal Studies Research Paper, online: <https://papers.ssrn.com/sol3/papers.cfm?abstract _id=2729509>.

39 “Contemporary researchers often differentiate between two types of empathy: ‘Affec- tive empathy’ refers to the sensations and feelings we get in response to others’ emo- tions; this can include mirroring what that person is feeling, or just feeling stressed when we detect another’s fear or anxiety. ‘Cognitive empathy,’ sometimes called ‘pers- pective taking,’ refers to our ability to identify and understand other people’s emo- tions.” “What Is Empathy?”, Greater Good Mag., online: <https://greatergood.berkeley.

edu/topic/empathy/defi nition>.

40 See Baron-Cohen, supra note 10. There are also people who have affective empathy but not cognitive empathy; this confl uence is seen in people with autism. See generally Simon Baron-Cohen, “Empathy Defi cits in Autism and Psychopaths: Mirror Oppo- sites?” in Mahzarin R. Banaji & Susan A. Gelman, eds., Navigating the Social World:

What Infants, Children, and Other Species Can Teach Us (Oxford: Oxford University Press, 2013) 212, online: <http://docs.autismresearchcentre.com/papers/2013_SBC_

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For purposes of this project, both types of empathy are necessary. The motivating theory of my work is that bankers are not (suffi ciently) aware of the potential negative consequences of their actions now, and could be made aware in a way that would motivate them to minimize those conse- quences, the former implicating cognitive empathy and the latter implica- ting affective empathy. Thus, in what follows, as I discuss the specifi cs of perspective-taking done using virtual reality, I will consider affective empathy in tandem with cognitive empathy.

I now turn to considering virtual reality. Virtual reality is increasingly being used in both educational and work settings.

41

Law scholarship increa- singly discusses virtual reality,

42

as does scholarship in other spheres. And of course it has captured the popular imagination.

43

Empathy-defi cits-in-autism.pdf>. Lack of empathy, especially affective empathy, is a well-known characteristic of psychopaths. There is some evidence that psychopaths are overrepresented relative to the general population in top executive roles. See Jona- than Pearlman, “1 in 5 CEOs Are Psychopaths, Study Finds”, Telegraph (Sept. 13, 2016), online: <https://www.telegraph.co.uk/news/2016/09/13/1-in-5-ceos-are-psychopaths- australian-study-fi nds/>. See also Kali Holloway, “10 Careers with the Most Psycho- paths Per Capita”, Salon.com (June 23, 2015): <https://www.salon.com/2015/06/23/

10_careers_with_the_most_psychopaths_per_capita_partner/>. Could interventions help psychopaths to be more empathetic? The existing research does not provide much reason for optimism, but perhaps new technologies can succeed or at least make some inroads where other methods have failed. And of course the bulk of the people we are interested in are not psychopaths; overrepresentation is still a small number, and most bankers are clearly not psychopaths.

41 Anna Stolley Persky, “How Are Law Schools Using Virtual Reality Tools in Classrooms?”

ABA J. (Jan. 2019), online: <http://www.abajournal.com/magazine/article/virtual_

reality_augments_law_school_curricula/>. See also Robb Lindgren, “Generating a Learning Stance through Perspective-Taking in a Virtual Environment” (2012) 28 Com- puters in Hum. Behav. 1130, online: <doi: 10.1016/j.compedu.2016.01.001>; Kate Bloch, “Harnessing Virtual Reality to Prevent Prosecutorial Misconduct” (2019) Geo.

J. Legal Ethics (forthcoming), online: <https://papers.ssrn.com/sol3/papers.cfm?abstrac t_id=3300360>; Alyssa Walker, “B Schools Use VR to Teach Leadership”, MBAStudies.

com (Apr. 11, 2018), online: <https://www.mbastudies.com/news/b-schools-use-vr- to-teach-leadership-2556/>; Ian Wylie, “Virtual Reality Prepares Students for Digital Leadership”, Financial Times (Mar. 4, 2018), online: <https://www.ft.com/content/

da636018-02bc-11e8-9e12-af73e8db3c71>.

42 A search on Westlaw for “virtual reality” in the Law Reviews and Journals database on January 24, 2019, yielded 1,591 hits. This surely overstates the number, insofar as the term is sometimes used more colloquially to modify “reality,” rather than to refer to

“virtual reality.” Still, many are on point.

43 Many uses of virtual reality are not relevant, or not wholly relevant, for our purposes.

Data visualization provides an example, as does what one might call logistical uses,

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Virtual reality and banker’s ethics 149

Some of these uses involve perspective-taking and empathy.

44

Indeed, there is considerable interest in the use of virtual reality as an empathy- creating (and enhancing) technique.

45

In my view, the results thus far sug- gest that the approach, while not a panacea, may have considerable promise.

46

Among the limitations of low-tech perspective-taking are that the effects might not last; virtual reality, by contrast, would seem to offer

such as helping someone see how an article of clothing he proposes to buy would look on him. See, e.g., Bram Nawijn, “9 Applications of VR in the Financial Industry”, TJIP.

com (Mar. 23, 2018), online: <https://www.tjip.com/en/publications/9-applications- of-ar-vr-in-the-fi nancial-industry>; Prakash Arunachalam, “How VR and AR Are Changing the Dynamics of CX in Banking and Real Estate”, Forbes (Mar. 19, 2018), online: <https://www.forbes.com/sites/forbestechcouncil/2018/03/19/how-vr-and- ar-are-changing-the-dynamics-of-cx-in-banking-and-real-estate/#3784a5ae50f3>;

Jeffry Pilcher, “10 Ways Banks and Credit Unions Are Using Virtual Reality”, TheFinan- cialBrand.com, online: <https://thefi nancialbrand.com/68593/banks-credit-unions- fi nances-virtual-reality/>.

44 See, e.g., Kim P. C. Kuypers, “Context-Dependent Emotional Empathy in Virtual Rea- lity (Empathy in Virtual Reality)” (2018) 5 Advances in Soc. Sci. Res. J. 379, online:

<https://www.researchgate.net/profile/Kim_Kuypers/publication/325049841_

Context-dependent_emotional_empathy_in_virtual_reality_Empathy_in_virtual_

reality/links/5af34a62aca2720af9c3ae1a/Context-dependent-emotional-empathy-in- virtual-reality-Empathy-in-virtual-reality.pdf?origin=publication_detail>. See also Austin van Loon et al., “Virtual Reality Perspective-Taking Increases Cognitive Empa- thy for Specifi c Others”, PlosONE (Aug. 30, 2018), online: <https://doi.org/10.1371/

journal.pone.0202442>.

45 A search for virtual reality empathy on Google on January 25, 2019 yields 7,870,000 results, some arguing for the promise of virtual reality to yield empathy, and others being much more skeptical.

46 According to a recent article, Fernanda Herrera et al., “Building Long-Term Empathy:

A Large-Scale Comparison of Traditional and Virtual Reality Perspective-Taking”, Plos One (Oct. 17, 2018), online: <https://journals.plos.org/plosone/article?id=10.1371/

journal.pone.0204494#sec033>: “over the course of eight weeks, participants who completed a VR perspective-taking task had more positive attitudes and signed a peti- tion supporting helpful initiatives toward the homeless at signifi cantly higher rates than the participants who just imagined what it would be like to become homeless or performed a less immersive perspective-taking task. The investigation also found that narrative-based and mediated perspective-taking interventions, regardless of immer- sion level, are more effective at increasing self-reported empathy than interventions without any perspective-taking tasks. The results of this investigation provide evi- dence suggesting that VR perspective-taking tasks may be more effective at improving attitudes toward specifi c social targets and motivating prosocial behaviors in the form of signed petitions in support of helpful initiatives than traditional and less immersive perspective-taking tasks.”

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perspectives that, once seen, would be hard to unsee. Moreover, a limita- tion of low-tech perspective-taking is how stylized it is: necessarily, certain aspects of the perspective are highlighted, with no mechanism to conjure up the residual aspects. Virtual reality might be able to do a better job in this respect as well, including by engaging more of a person’s senses – vision and sense of smell, for example – and sensations, such as fear or humilia- tion.

Work in this area is being done regularly, and I expect that by the time I begin, there will be a great deal more research to draw on. For present purposes, I will briefl y articulate the promise of the approach, but also some of its challenges.

The promise is straightforward. As discussed in Hill & Painter,

47

ban- kers, for many reasons, do not suffi ciently consider the effects of what they do, especially on more remote third parties. The book discusses, among other things, the crowding out that occurs when bankers work in a hot- house environment with one another and have one another as their relevant peer group, and when they get so caught up with the technical diffi culty of a task – the ‘how’ – that they do not reach the ‘whether’ question: should this particular technique be developed and used?

48

Social dynamics, societal glamorization of greed and its rewards, and other factors, may have contri- buted as well.

49

The promise is to conjure up, in individualized settings and in very salient ways, the effects that may not be being suffi ciently attended to.

50

Of course, the challenge is considerable. What consequences would be conjured up and how? The range is enormous: do we show “Grandma Millie” in the dark because she can’t pay her energy bill? Do we show people in interminable lines in Greece, in front of grocery stores or ATMs that have rapidly dwindling amounts of what the people are in line for (that is, groceries and money)? Do we show nearly-abandoned communities where most properties were lost to foreclosure? Even if we could fi gure out what to show, to whom would we show it and how often? Informing how these issues are to be worked out, the aim is not to counter insuffi cient empathy with excessive empathy. Too much empathy can be paralyzing.

One of my colleagues fi nds giving low grades so distressing that she has

47 Hill & Painter, supra note 2, 108-124.

48 Id. See also: Hill, A Personality Theory of White Collar Criminals, supra note 25.

49 Hill & Painter, supra note 2.

50 Maibom, supra, note 38.

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Virtual reality and banker’s ethics 151

signifi cant physical symptoms, such as insomnia, for several days during and immediately following the grading process. A business will, of course, produce winners and losers. People who have “excess” empathy may be ill- suited to business, and certainly, a business should not seek to instill

“excess” empathy. Calibration is key. Another challenge relates to what I characterized previously as ‘failure of will.’ Underlying the theory that vir- tual reality could work in this context is the idea that bankers’ imagina- tions are limited, but that they are willing and open to seeing what they do not presently see. Returning to the Upton Sinclair quote, how strong of a stake might bankers have in not seeing what we want them to see? Psycho- logists have documented many mechanisms people can employ to keep their pre-existing worldviews in the face of challenge.

51

Such considerations would very much inform the design of any virtual reality program; if the bank were to take Consultant Y’s recommendations into account in chan- ging hiring, fi ring, and other employment practices, the challenge these considerations pose might be limited, insofar as Consultant Y’s recommen- dations should yield a workforce whose identities depend less on maintai- ning these ‘failures of the imagination.’

52

The ultimate hope is a change in the individual bankers – and in the culture of banking.

Let me close by telling you how much I have enjoyed thinking about this project thus far, and how enthusiastic I am about attempting to deve- lop a virtual reality program for Laissard Pères. I note that you have world- class engineers on your staff, who I gather would be made available to me to design and craft prototypes of the device and the program. I very much look forward to moving forward!

With great enthusiasm, Professor X

51 See, on motivated reasoning and confi rmation bias: Epley & Gilovich, supra note 35;

Hill, “Cheap Sentiment”, supra note 35.

52 Indeed, in this regard, I note with approval the use by Consultant Y in its report of Alain Cohn, Ernst Fehr & Michel André Maréchal, “Business Culture and Dishonesty in the Banking Industry” (2014) 516 Nature 86, online: <https://www.nature.com/

articles/nature13977> (arguing that when their identity as bankers is made salient to bankers, they are more apt to be unethical).

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